On a call with analysts, Chief Executive Mike Ullman said the company is comfortable and confident with an 11% rise in its inventory as it restocks private label merchandise such as St. John’s Bay. In its home department, Penney also has taken steps to fix the problems, including removing some brands that didn’t work, while adding entry-price level home goods and bringing back such popular categories as luggage, window furnishings and towels to re-engage demand.

For the holiday season, after missing sales last Black Friday by opening stores later than its rivals, the company is opening its stores at 8 p.m. on Thanksgiving. This week it introduced what Ullman calls a “disruptive” marketing campaign. The company said it’s seen positive traffic November and shoppers are buying once they get inside the store, increasing the conversion rate.

Ullman acknowledged some of the setbacks to the turnaround included clearing the merchandise brought under his predecessor that didn’t resonate with its shoppers. The company had to sell some of those products below cost to clear them out, hurting the third-quarter gross margin. Margin also was hurt by theft. However, he said overall the company’s promotional strategy didn’t vary from in 2011 when he was last at the helm. “We aren’t giving goods away,” he said.

On margin outlook: Private brands which resonate so well with customers give us the best value and margin, he says. We are close to desirable level. Editing out the undesirable shops and brands. Taking steps to reduce shrink. We aren’t giving products away. We are comfortable with promotional merchandise strategy. It’s not different from what we had in 2011.

Besides Veterans Day and Black Friday sales, we have necessary promotions necessary to compete head to head with our competitiors. We’ve invested in “disruptive” family-oriented marketing campaign this holiday. We worked very hard.

10 different initiatives in home, Ullman says. We need to rebalance the lifestyle mix. We were a bit too modern. Didn’t have too much opening price products. We were out of balance in terms of hard and soft goods. Customers need to know what’s new and what’s the good, better and best. We are restoring some of the business. We were no. 1 in window before. Fragrance and gifting also opportunities. luggage also an opportunity. Jonathan Adler, Michael Graves we’ll see if some gifts resonate.

CFO says IMU has made progress. Based on level of promotional activity. When we look at regular and sales business compared to 2011, we are seeing selling margins that are comparable. We’ve seen improvement. The problem is to clear out the merchandise from the past year that didn’t resonate.

CEO: it’ll be much more instructive to look at practices before last year. We are prepared for spring. We feel we’ve planned holiday correctly. We have strong team and leaders. I’m confident we’ll deliver the plan.

CEO: If you lose $4.5 billion in sales, you won’t put it all back. We aren’t planning inventory ahead of what we see as the normal sales trends. Our associates are excited about seeing customers they’ve not seen in a while. Inventory isn’t an issue for us. It’s an opporutnity. Not a problem. If you overplan sales, you end up having too much inventory. Almost anything you look at against last year’s metrics, very difficult to look at that. our expense structure is lower. Inventory is where we want to be. Team is ready. Suppliers are eager to help. We are confident we are headed in the right direction. We are confident.

Gross margin on new inventory. Private labels are back to restore margin. The pluses to margins are in place. Security devices that were taken off led to shrink. As we manage the mark up to allow for necessary markdown. Markdown in planned level. There’s no other hidden component in GM.

You can tell from the tone and substance of the call we are excited about our turnaround process. We know where our problems are. We are encouraged by 10,000 plus associates eager to compete in the holiday season

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Behind the Storefront is a blog about all things retail. It’s aimed at investors, shoppers and anyone else with a passion for learning about what drives consumer behavior. Hosted by Andria Cheng, Behind the Storefront will cover the business, brands and shopping behavior that’s behind some of the biggest companies, and largest employers, in the world. You can reach Andria at Acheng@marketwatch.com.